This is the number one complaint we hear from clients who reach out to us for services. About a year ago we started working with a new client. He reached out to us for our CFO services to help him understand whether his organization’s accounting work was too much for the one-person accounting department he had set up. What we discovered was exactly what we find in most organizations for whom we do this type of assessment. Borrowing the format from David Letterman’s “Late Show,” I have listed below the top 5 reasons we see for financial statements delivered late:
- Paving the cow paths. The processes being used on a daily, weekly, and monthly basis get the work done, but are not the most efficient. This is very typical with organizations that, at one point, had multiple staff members in their accounting department and consolidated those responsibilities to fewer employees or even one full-time person. This is most common when the remaining person is also new to the organization. For lack of understanding or fear of making a mistake, they continue following the same processes since they don’t have the time to question, think, and implement a more time-efficient way to perform the same task.
- Missing a detailed work flow. This is planning the work and working the plan. A properly planned work flow contains a breakdown by task, person, date and time. Accounting is cyclical and the same tasks need to be performed daily, weekly, and monthly. A well thought out plan considers the tasks and their domino effect on other tasks.
- Too much focus on the small details. The accounting staff needs to discern between a problem that needs to be addressed immediately and a problem that can be set aside for the time being and addressed at a future, pre-scheduled date. Allowing the small details (such as small reconciliation differences) to delay the entire process will later lead to rushing through the most important parts of the work flow.
- Putting out fires. Performing the work in the detailed workflow should be the staff’s first and primary priority. However, questions and problems can arise, sometimes on a daily basis. The staff should schedule time to address these questions and problems after the workflow tasks have been completed. As with the small details, the staff needs to have the ability to discern between what is a true emergency or someone else’s emergency being unduly imposed on them.
- The accounting staff has other responsibilities. This was the one change that made a key difference for our client. His accountant was also responsible for managing the office move, ordering supplies, dealing with the landlord, and organizing the office parties. Some of these tasks were surprisingly more fun than the bank reconciliations. Let’s face it, a good accountant is a very valuable employee who has common sense, attention to detail, and is organized. These are qualities we seek for other projects and positions as well. But if we stretch the accountant too thin, something has to give and it is usually the timeliness of the financial statements.
Our client has made some good changes, including sending the accountant to workshops that have empowered her to prioritize and say “no” to distractions and other people’s emergencies. It is a lesson other organizations can employ before deciding to let go of their otherwise qualified staff.
Maribel Ponist, CPA is CEO and Director of Client Accounting Services at Lumix CPAs and Advisors. She is a member of the Advisory Board for CPA.com and the AICPA Digital CPA Conference. She also serves as a peer reviewer for the Maryland Association of Nonprofits Standards for Excellence Institute®. Follow Lumix on Twitter, Facebook, and LinkedIn for the latest insights, news, and updates in accounting and advisory services.